Many businesses create ambiance in their establishments with music or broadcast programming. Any establishment providing this kind of entertainment must comply with legal requirements to avoid copyright infringement liability.
Rights in music and programming
The creators and owners of music, movies, television programming and other entertainment works own certain rights under U.S. copyright law. One of those rights is a public performance right, which gives the copyright owner the right to have its work performed at a place open to the public or at any place where a substantial number of persons outside of a normal circle of a family and the owner’s social acquaintances is gathered. The copyright owner also has the right to give others permission to perform the work publicly in exchange for payment of a royalty.
Although a person who has purchased entertainment (e.g., a music CD; a movie DVD; a streaming music subscription; a cable TV account) has the right to listen to and enjoy that purchase privately, he does not automatically have permission to share that purchase publicly. In most circumstances, anyone wanting to broadcast music or programming publicly must obtain a license to do so from the owner of the copyright.
The music licensing/royalty collection process can be quite cumbersome. There are three major performance rights organizations that function as clearinghouses to license public performance rights to entities desiring to play music publicly: the Society of European Stage Actors and Composers (SESAC); the American Society of Composers, Authors and Publishers (ASCAP); and Broadcast Music Inc. (BMI). Each of these organizations has a huge repertoire of copyright owners that they represent, and although one song may be represented by more than one of the organizations, none of the three organizations represents every copyright owner. A license from an organization therefore only allows the licensee to publicly perform works in that organization’s repertoire. These organizations have multiple license options which purport to take into account the type of establishment, how the music is performed and how many people will be present.
For a bar or restaurant, a blanket license, which allows the music user unlimited access to the organization’s licensed repertoire for a contractual period of time, is generally the best fit.
Many cable/satellite providers offer packages for restaurants and bars that already cover the rights to the programming. These providers may impose their own restrictions on the rebroadcast of programming. If an establishment’s contract with its cable/satellite provider doesn’t include those licenses, the establishment will need to get the appropriate licenses from the performing rights organizations before broadcasting programming to its customers.
Licensing exception for small establishments
There are some limited circumstances where small restaurants and bars don’t need to obtain performance rights where over-the-air radio, TV, cable or satellite TV is used to provide atmosphere, but no charge is made to enter the premises, where the premises is less than 3,750 square feet in size. If an establishment is playing the radio, it can have a total of no more than six speakers, no more than four of which are in any single room or adjoining outdoor space. If it is providing TV programming, it can have no more than four TVs, with no more than one in each room, and no TV can have a diagonal screen size of more than 55 inches, and the same rules that apply to radio limit the number of speakers that can be used to play the TV sound.
The above exception, however, does not relieve the owner of an establishment from properly obtaining permission to play CDs, MP3s or stream Internet audio or from allowing a cover band to perform live music to customers.
Risks for failure to license
A business that improperly provides music or broadcasting in its establishment will be vulnerable to lawsuits brought by one of the performing rights organizations. These performance rights organizations have been increasingly bringing lawsuits relating to live performances of unlicensed music. Damages for copyright infringements can range from $750-$150,000 per song played, depending on the circumstances.
The process of responding to a letter from a performance rights organization is far more costly than taking the time to obtain the proper licenses in the first place.